An econometric analysis of motorcycle ownership in the UK

Abstract

This paper reports on an econometric investigation of motorcycle ownership in the UK. The favoured specification is a stock adjustment model augmented by a stochastic trend to allow for changing consumer preferences over modes of transport. Empirical estimates suggest that the future growth prospects for motorcycles may be quite good. This tentative conclusion follows primarily from what appears to be a significant, relatively high, long-run income elasticity of demand for motorcycles, combined with a high cross-elasticity of substitution effect with regard to a measure of the cost of motoring, which is dominated by the costs of buying and running a car. At the same time, our estimates indicate that these effects are subject to a countervailing tendency, represented by an on-going change in the public’s preferences away from motorcycles towards other modes of transport. Which of these tendencies will dominate in the motorcycle market over the next few years remains to be seen.